Solazyme Falls as Roquette Algae-Food Joint Venture Ends

June 24 (Bloomberg) -- Solazyme Inc., the maker of algae-based biofuel and nutritional products, fell the most in 21
months after terminating a food-product joint venture citing
“divergent” views with French partner Roquette Freres SA.

Solazyme slumped 13 percent to $10.94 at the close in New
York, the most since Sept. 22, 2011.

The Solazyme Roquette Nutritionals LLC venture, established
in November 2010, will be dissolved in the coming weeks,
according to a statement today from South San Francisco,
California-based Solazyme.

Solazyme contributed its algae technology to the venture
and the French agriculture company was providing capital to
build manufacturing facilities. Dissolving the partnership means
Solazyme loses a potential source of revenue from selling
nutritional products, said Weston Twigg, an analyst at Pacific
Crest Securities LLC in Portland, Oregon.

“That’s the one thing that the Roquette venture takes
away: they would have gotten paid out of the profit from the
JV,” Twigg said today in an interview. “Now we don’t have
that.”

The joint venture began work last year on a plant with
annual output of 5,000 tons, and the companies had planned to
eventually build a larger facility with 10 times the capacity,
according to a May 8 filing.

The venture was developing microalgae-based ingredients and
oils to boost the nutritional content of food products,
according to its website.

‘Divergent Views’

“The decision to terminate the joint venture was driven by
divergent views on an acceptable commercial strategy and
timeline for the manufacturing and marketing of joint venture
products,” Solazyme said in the statement.

Exiting the venture will accelerate the commercialization
of the technology and is in the “best interest” of
shareholders, Solazyme Chief Executive Officer Jonathan Wolfson
said today in a conference call. He doesn’t expect the decision
to affect revenue this year.

“The decision isn’t related to technology readiness or
robustness, product quality, the product value proposition, or
market demand,” Wolfson said. “We believe revenue and profit
from these products will benefit Solazyme sooner than would have
been likely under the joint venture.”

“If there’s a little positive bias to this it’s that this
opens up more of the food and other nutritionals market a little
earlier,” Twigg said. “That would help with the profitability
of the model and help with their expansion.”

Solazyme feeds sugars to its bioengineered algae to produce
oils that may be used in fuel, chemicals, nutrition and and
personal-care products. The company in December reached
commercial-scale production of the renewable oil at an Archer-Daniels-Midland Co. plant in Iowa.